Truthfully, I don't see this working out in the long run. Companies like Facebook are making desperate grabs to keep control over how work is done and how it is compensated, but I believe market forces will kill efforts like ZIP code based compensation.
In reality, if you're top tier talent, you can command top tier compensation no matter what your ZIP code is. Facebook's strategy relies on every other company colluding with them to suppress compensation based on locality.
I think you're right, but I don't think the end game is that everyone gets FAANG-level salaries everywhere.
When companies realize that they can hire people for a fraction of SF Bay Area salaries while still paying them 20-30% more than their local salaries, the overall compensation structure will slide downward toward that number.
Then the next step is when they realize they can hire foreign people in similar timezones at another lower step on the compensation ladder (while still paying more than their local jobs would offer). The compensation then slides further down toward this average.
> In reality, if you're top tier talent, you can command top tier compensation no matter what your ZIP code is.
Works in theory, not as much in practice. There's still value to having people collaborate in person (I say this as someone who has primarily worked remote long before COVID). Companies paying top dollar have a lot of leverage to get employees to move and work in-person still.
Half of Bay Area FAANG salaries is still more than a huge swathe of localities in the country - let alone the continent, where you'd likely plumb a quarter or an eighth and still be above local averages.
An instructive example would be India: TC for senior engineers at Google, Amazon, Uber, etc is already north of $150k there. Note that this is _already higher_ than the median tech salary _in the US_. Meanwhile there are still places in India paying new grads $10k.
You see something similar in Ukraine, where 40-50k was a reasonable rate for senior engineers, and then Lyft enters the market and starts giving seniors 6-figures.
I think the answer, as always, is that there are just not enough sufficiently talented & qualified engineers, even taking into account the global talent pool, to balance the rapidly increasing demand for those engineers. If it was just one or two companies paying this level of outsized compensation I'd be skeptical of the long-term trend, but it's not - this is pretty much all modern tech companies, because the unit economics of software businesses make good developers extremely valuable.
I was curious what the story looked like for South America, and, hey, turns out these tech companies already pay 6-figures there too. Heck, Coinbase is offering _mid-level_ engineers in Brazil 6-figures for remote roles.
Keep in mind these companies are really trying to get the 1% of developers in that market. Anything below the 95th percentile is unemployable. [0] [1] [2]
[0] https://restofworld.org/2020/india-engineering-degree/
[1] https://www.business-standard.com/article/opinion/india-s-ta...
[2] https://www.business-standard.com/article/companies/95-engin...
If you're willing to pay more for identical work because your employee chose to live somewhere more expensive, you're encouraging your employees to live in the most expensive places.
On the other hand, if you offer a fair wage for the work done regardless of location, your employees get better value by living somewhere inexpensive, which lowers the required compensation for the same employee.
I think Facebook is simply creating more problems for themselves by bothering with this.
(1) Bob is optimizing long-term savings, and Joe is optimizing purchasing power for nearby activities like bars and restaurants. After subtracting other comparable expenses, any salary surplus strategy which is a "perfect" cross-city CoL adjustment for Bob will when applied to Joe cause him to prefer a cheaper CoL location because his dollars will go further. Supposing the employer doesn't have power to discriminate based on such preferences, no fair CoL adjustment is perfect for both individuals.
(2) Bob is still optimizing long-term savings. MegaCorp chose a "perfect" CoL adjustment based on Bob's preferred standard of living, but the multiplicative nature of price increases in a high CoL city means that Bob can save a ton of money with a mild decrease in his standard of living. He's incentivized to live somewhere more expensive because doing so will maximize his potential savings with minimal impact elsewhere in his life. If the employer isn't discriminating based on what's paid for rent and other expenses, the CoL adjustment is gameable.
It's much easier to move from an expensive city to an inexpensive city than vice versa since your savings will go much further in the inexpensive city.
As I keep asking when this comes up, if this is true then why are salaries for FAANG engineers so much lower in London? London, as you may know is 100% not cheap, and yet salaries there for FAANG tech people are approximately 50% of those in SF/US.
This was always the policy, they paid wages based on the market. They did, however, pay identically in all of their US offices (prior to Covid) which is perhaps why people are surprised about this (entirely normal and expected) practice.
Given that I don't live in the US, I don't like this policy, but it's been around forever basically, at all large tech companies.
I think the salary adjustments aren't so extreme that you're actually indifferent from living in an expensive place. Also, most employees aren't unattached 20 year olds. I choose to live in a high cost area because my family is here and this is where I grew up.
> On the other hand, if you offer a fair wage for the work done regardless of location, your employees get better value by living somewhere inexpensive, which lowers the required compensation for the same employee.
Would you be okay if the 'fair wage' was based on a global developer workforce? For instance, median programmer salary for the UK is ~$41k while the US is $74k, not to mention salaries in developing countries. Everyone assumes that fair consistent salaries will just take inflated San Fransisco levels and apply them globally when in reality, its more likely that we readjust all salaries based on lowest cost of living.
Because, I mean, waterfront property has a premium everywhere, and even in the same exact "starter home" location I'm sure you could teardown and fit a $3M home. Those choices aren't determined by the metro area.
Top tier candidates aren't stupid, and ones that would willingly subject themselves to that are probably just looking for a year or two stint to bolster their resumes. Either that or they aren't as smart as they make themselves out to be.
That's the official HR policy.
In real life... key contributors are magically exempted. If you aren't making SV rates no matter where, that's a career red-flag.
Someone who is legally owned by another person and is forced to work for that person without pay
Companies were in a race to the bottom for wages, and many still are. People working these jobs sure maybe they can get an education, or get a foot in somewhere else. What about the next person to fill the shitty role they left? It's a continuous cycle of shitting on the lowest paid people in society and it needs to stop
The abolitionist and former slave Frederick Douglass had this to say on the subject[1]:
> [E]xperience demonstrates that there may be a slavery of wages only a little less galling and crushing in its effects than chattel slavery, and that this slavery of wages must go down with the other
From Wikipedia[1]:
> Douglass went on to speak about these conditions as arising from the unequal bargaining power between the ownership/capitalist class and the non-ownership/laborer class within a compulsory monetary market: "No more crafty and effective devise for defrauding the southern laborers could be adopted than the one that substitutes orders upon shopkeepers for currency in payment of wages. It has the merit of a show of honesty, while it puts the laborer completely at the mercy of the land-owner and the shopkeeper"
Do you often exploit slaves as a rhetorical tool?
People at the lowest paid tiers of society do not have a choice
Even in California, SF has different payroll taxes and regulation than other cities in the area. Massachusetts requires employers to open a unemployment account in state. If the employee moves to a state the employer doesn’t have a employees previously, you need to register in the state and it might mean you have to now pay sales taxes on revenue in the state.
So unless you become an independent contractor and deal with this things yourself, the employer needs to know where you live most of the tax year.
My point was that main reason companies need to know where the employee is compliance, employment law, taxes and potentially IP protection. While the employer wouldn't care about the location because of pay scale, they still need to know for other reasons.
Until we can all live in some United Kingdom of the Internet, the unfortunate fact is that local laws apply to companies and employees when the employee resides in the jurisdiction.
I think most companies still consider your location when determining your pay. Facebook does for instance, even going as far as tracking your IP to make sure you're being honest. If you choose to move to a lower cost city, they'll adjust your wage. Not sure about the other way around.
That'll probably eventually change, but it could be a useful indicator. The median employee that chooses to live in X may be more productive that the median employee that chooses to live in Y. But that's yet to be seen